April 29, 2016

As most everybody is aware by now, the IRS has been under considerable strain for a number of years from budget and staff reductions that have left it underfunded, understaffed, and under pressure. This is part of the right's effort to "shrink the government to a bathtub and drown it." If the main organization for helping Americans understand their tax obligations is understaffed, it is likely that many people will become irritated with the agency and blame it (and taxes) for all their problems. If the main organization for enforcing the U.S. tax laws fairly has too few people to audit the most likely scoflaws and too little money to prepare guidance and rulings to make it harder for scofflaws to scoff at the law, then many people will become irritated with the agency and blame it (and taxes) for their problems while many other people (especially the privileged rich) will continue to scoff at the law by overstating their basis when they sell capital assets, hiding assets in tax havens, and just hiring lots of expensive tax attorneys and accountants to come up with schemes for wiggling through the loopholes in the Code to avoid more taxes.

And of course, if the main organization for ensuring that tax-exempt organizations are not abusing their tax exempt status by using "dark money" to allow the domestic elite and foreign powers to influence and control federal elections and legislation, then odds are the rich and elite and foreign powers will wield more and more influence and control over who gets elected and what kind of legislation they pass. Odds are we will see even more of the kinds of absurd legislation disenfranchising the poor and minorities by making it harder to vote, harder to get a State-issued I.D. card, harder to wait in line for hours at the polls (if you will be fired for not reporting to work), etc.

None of this is any surprise.

None of it is good government.

All of it is supported by the current radicalized uber-right-wing Republican Party hacks that are running many state governments and hold the majority right now in the U.S. Senate and House of Representatives.

As the New York Times editorial board noted, "[c]laiming a 'social welfare' tax exemption has become a tool for powerful political operatives like Karl Rove, the Republican campaign guru. His Crossroads GPS group, which has 501(c) status, has spent $330 million on ads and candidates since it was created in 2010." See Editorial, Dark Money and an I.R.S. Blindfold, New York Times (Apr. 28, 2016). And of course, with all the ranting about it being a problem to pick a group with "Tea Party" or "Progressive" in their name for closer scrutiny (when any common sense analysis will tell you that such a group is quite likely to be engaged in forbidden lobbying activities), "the IRS has groiwn ever more gun-shy about enforcement."

So the latest bill wreaking havoc on democracy, put forward by Republican Peter Roskam in the House of Representatives, would eliminate the current law that requires those who donate more than $5000 to a nonprofit to be disclosed to the IRS (though redacted for public versions of organizations' tax forms).. See, e.g., Richard Rubin, House Republicans Seek to Block IRS Collection of Non-profit Donor Data, Morningstar, Apr. 28, 2016. That means a foreign corporation or a foreign sovereign power could contribute enormous sums to shape the legislative and regulatory regimes in our country, and there would be NO WAY TO POLICE THE PROBLEM.

Further, it is hard to understand why any donor to a tax-exempt organization should be entitled to anonymity. The organization is able to avoid paying any taxes on the funds received, and--especially under the current malevolent eye from Congress towards the IRS--the IRS is hamstrung in enforcing the law against political campaigning with 501(c)(3) funds. What we should do instead of allow complete anonymity and the power plays that encourages is the opposite: the name of every donor who gives anything more than some de minimis threshold amount to any tax-exempt organization should be publicly available, and the amount given should be publicly available. After all, if money is "speech", "speech" is supposed to be heard. Remember the old saying about the tree that fell in the forest and whether there would even be any sound if there were no eardrum available to hear it. That's certainly the case with speech. If giving money is a form of speech, than the gift and giver shouldn't be hidden under a bushel but should be broadcast far and wide for anyone who wants to know.

Note that the bill would also mean that the 'dark' groups under 501(c)(4) wouldn't even have to provide information about the number of large versus small donors that it has.

By the way, if you have any doubts that Peter Roskam has no interest in the best interests of ordinary Americans, remember that back in November he was one of the gang of four that proposed pre-empting the rule expected from the Labor Department to impose a "best interest" standard on retirement advisers. They were so worried (weepy face) that some professionals who handle money for retirees might refuse to do it any more if they weren't allowed to continue paying more attention to lining their own pockets rather than providing sound advice to their clients. See Teresa Tritch, A New Threat to Your Retirement, New York Times (Nov. 19, 2015) (with a swarmy picture of Peter Roskam).

April 23, 2016

The IRS is a government agency that endures all kinds of hostile attacks. Most people don't really like to pay taxes. Even I don't really "like" paying taxes, though I do recognize the importance of paying taxes and supporting the societal infrastructure that pays for the Centers for Disease Control, basic research, the space telescope, programs for those in or near poverty, Pell Grants for students to attend college and many other important and necessary federal programs (not to mention the tax-guzzling military budget that probably could be cut in half, if only we had the gumption to do it). So the right-wing effort to "drown the government in a bathtub" and make the world safer for the corporatist elites to sock away their wealth without paying a dime to support the society that made that wealth possible tends to demonize the IRS at every possible opportunity under a Democratic president.

ASIDE: This is on a par with the way other things are treated. Reagan cut taxes in 1981 and then increased them every year thereafter, mostly increasing the burden on those in the lower end of the income distribution, so Reagan is remembered as the great tax cutter. Reagan's administration had the Beirut bombing that killed 241 U.S. soldiers in their barracks, but Obama's administration bears the millions of dollars spent in eight (and counting) investigations of the four deaths in the Benghazi attacks. There is a tendency for people to remember events and fiscal policy to suit their preconceived view of things.

So the New York Times on Friday reported on the havoc that the right's attacks on the IRS's budget and its employees' morale has wrought. Congress writes the tax laws, but the right tends to talk about the executive agency as though it 'owns' the tax laws instead. I.R.S. Fights Back Against House Republicans' Attacks, New York Times, Apr. 22, 2016. As the article notes, "the agency even got the blame for the hated tax code, which Congress writes and Republicans have promised for five years to rewrite and simplify." (And remember, simplification is the wrong aim--it is part of the propaganda that wants ordinary Americans to support a tax code rewrite that tilts the code even further towards the wealthy. See the last two posts on A Taxing Matter.)

As certain as death and taxes, tax season political attacks on the I.R.S. go back decades. But in recent years, the intensity has grown and the agency’s funding in turn shrank more than any other time in memory. The campaign gained strength in 2013, when Republicans seized on management failures to allege that I.R.S. employees had singled out conservative groups for greater scrutiny and delays in reviewing their applications for tax-exempt status as “social welfare” organizations, though liberal-leaning groups were examined as well, investigations showed.

Clearly, the IRS is a centrally important agency that cannot be eliminated. We need to collect taxes, and we need an agency with the expertise to advise Congress about tax law and policy as well as to interpret the laws in a way that makes it possible to implement them. (Congress has a tendency to leave anything really difficult to the IRS to figure out, by authorizing or ordering the Secretary of the Treasury to promulgate regulations carrying out the intent of specific provisions.) We need to have sufficient IRS staffing to enforce the law through tough audits, especially of the wealthy and corporate enterprises. We need to have sufficient funding to maintain updated technology--one of the problems with the cuts in funding to the IRS is that the computer systems are more easily hacked than they should be. That fault lies with Congress, which expects managerial miracles from an agency with constant battering from the right-wing to try to demoralize its employees and constant resource cuts that make budget planning and regular maintenance of systems practically impossible. When Congress adds additional functions to the agency (whether in the form of additional tax systems to oversee, such as the penalty provisions in the Affordable Care Act, or additional tax expenditures operating as a subsidy to one or another of Congress's favored groups, such as the section 199 "manufacturing" deduction) but fails to add funding to cover the additional responsibility, it means that the IRS's ability to carry out its task well will be jeopardized, and service to taxpayers will decline.

“The Congress on one hand adds complexity to the tax system by the tax laws they enact but will not recognize the costs and administrative burdens placed on the agency to carry out the laws it passes,” said G. William Hoagland, who was a senior budget adviser to Senate Republican leaders for more a quarter-century.

The fact is, the IRS makes money when Congress gives it funding to ensure tax compliance: as the article states (and many studies support), "the agency collects at least $4 for every $1 it spends for tax compliance." Former IRS commissioners--during Republican and Democratic administrations--therefore joined together to urge Congress to undo the perverse results of underfunding the IRS.

“Over the last 50 years, none of us has ever witnessed anything like what has happened to the I.R.S. appropriations over the last five years and the impact these appropriations are having on our tax system,” they wrote.

Federal reports document the impact. Tax audits are at the lowest level in a decade, affecting fewer than 1 percent of taxpayers. Reduced efforts to enforce compliance cost an estimated $6 billion in uncollected revenues in 2014 and $8 billion in 2015. The I.R.S. has a backlog of almost a million pieces of correspondence from taxpayers.

Stan Collender, a budget analysis, is right when he says (as quoted in the article):

“You really shouldn’t be able to reduce the amount you spend on I.R.S., decrease their performance ability and then complain about their performance.”

July 26, 2013

As the budget battles loom again in our dysfunctional Congress, one of the targets of the right is, not unexpectedly, funding for the IRS. Sequestration is already hampering the IRS's ability to perform its functions. See $6 collected for every $1. But the right wants to cut funding for the IRS to a mere three-fourths of its current level. See Rubin, GOP Proposes Reducing IRS Budget by 24%, Bloomberg, July 9, 2013, at Accounting Today.

It's worth thinking about what this kind of budget reduction for the IRS--one of the biggest "too big to fail" financial institutions in the country--would mean. Remember that the IRS performs essential governmental functions--enforcing the tax laws and collecting necessary government revenues. In connection with these enforcement and collection functions, the IRS has implement a number of congressional policies (often with very little guidance) and, working with others in Treasury, provide guidance in the form of revenue rulings and regulations for many different types of taxpayers, as well as internal procedural guidelines for revenue officers. It has to determine eligibility of numerous organizations for the various "tax-exempt" categories Congress has created. It has to track information received from the myriad tax-reporting provisions. It has to ferret out tax scams and shelters invented by high-paid accountants and law firms and in-house counsel. It has to examine and audit and negotiated with taxpayers who are often better resourced and therefore able to "outgun" the agency. It has to provide information and testimony to Congress. It has to interact with tax lawyers in their professional organizations, such as the ABA Tax Section and the NYSBA Tax Section. And, to do its job decently well, it must spend considerable effort recruiting and training employees and overseeing them.

Much (if not all) of the problems pointed out (especially by the right-wing propaganda corps attempting to generate a "scandal") about the IRS mismanagement of the thousands of 501(c)(4) applications it receives stems from under-resourcing of the agencies and the lack of skills training, computerized systems and solutions, and sufficient management personnel to ensure efficient and timely use of resources to target scrutiny to those organizations most likely to be in breach of requirements.

So one would think that the right response to the intense need for a good revenue collection and tax-law enforcement agency would be to increase resources rather than to cut them. But there is a significant portion of Congress people-especially in the House--that is not interested in ensuring that the government that they are a part of function properly and especially not interested in having the tax-collection-and-enforcement agency work properly. As James Maule put it on Mauled Again earlier this year in a discussion on IRS hearings:

[A]nother member of the panel tried to make the point that cutting IRS funding doesn’t necessarily mean revenue will decrease. He tried to make his argument by claiming that increasing IRS funding does not increase revenue. He asserted that funding for the IRS increased from 2001 to 2009 and yet revenue decreased during that period. No kidding. The revenuedecreased because in 2001 and again in 2003, the geniuses behind tax cuts succeeded in persuading the nation to accept a cut in its tax revenues at the same time it was pumping trillions of dollars into war expenditures. It was encouraging to hear another member of the party point out that the economic downturn also was a reason for the decrease in revenue collection. Yet it remains deeply disturbing that Americans have elected to Congress someone who thinks that sequestration of IRS funding won’t have an adverse impact on revenue.

The attempts to shrink the IRS is part of a larger, pervasive, foundational aspect of the anti-tax crowd’s plans to unchain themselves from any attempt on the part of anyone to get in their way as they exalt themselves at the expense of the society on which they are, no matter their denial, very dependent. I have explored the short-term foolishness of cutting IRS funding in posts such as Another Way to Cut Taxes: Hamstring the IRS. At a time when the Congress has piled dozens of new credits, deductions, and exclusions onto already complex tax law, has turned the IRS into the health care enforcer, and has required the IRS to serve as a collection agency for unpaid child support and other debts, it is absurd to cut IRS revenue collection efforts. When people defending the anti-government agenda claim to take their inspiration from the private sector, they conveniently ignore the fact that if a business wanted to eliminate its operating loss, the prognosis for success would be zero if the business ceased all advertising and left its cash registers and online payments systems unattended and unfunded.

This idea of cutting the agency that is already so underresourced that it cannot fight the hired guns of the multinational corporations and Big Oil, Big Pharma, and other sophisticated big-monied taxpayers fits with the general corporatist approach of those on the right these days. It is an approach laden with anti-populist, pro-oligarchic, class warfare sentiment. It is the "meritocratic" notion that those who have most already should have even more because they "merit" it, while those who have less can be allowed to suffer their plight without any role of government to provide a safety net. It is the force that pays CEOs and other top managers and directors obscenely high salaries in bad times as well as good times, no matter what they do to create ruin for their communities and their employees and even their companies, under the false belief that the people at the helm are responsible for all productivity gains and none of the productivity losses of the firm. It is behind the effort to reduce pensions of already-retired union employees and the fight against unionization from wealthy interests (like the billionaire Walton heirs whose WalMart stores still refuse to pay a living wage). It is behind the decades of Reaganomics and Friedmania, two cult ideologies masquerading as economic theories that have wreaked havoc on the US economy and most especially on its middle class and poor. It has left one-fourth of American children living in poverty. It has created a country with untold wealth that won't pay for decent public schools or decent public health care. It has privatized education to the point that poor school districts are forced to subsidize religious and other private schools while trying to maintain a decent quality of education in public schools for the not-wealthy children that remain in them. It has allowed Big Banks and Big Insurance companies to reap "rentier" profits from municipal necessities and personal health care needs, all in the name of claiming to support personal freedom. It is behind the GOP-driven refusal to support Detroit in Michigan where businesses and the wealthy get huge tax breaks, but the city on which the state depends for its future is treated as a misbehaving child, with its (mostly black) residents punished for the city's exploitation by Big Banks and by corrupt leaders. This right-wing behemoth continues --with the aid of the so-called "centrist" Democrats--to paint Social Security and Medicare as too-generous "entitlements" whose benefits need to be pushed back to avoid the need to increase taxes to support them. This corporatist class warfare, in other words, is remaking the US economy into a have and have-not society that privileges the wealthy while peonizing everyone else. The push to defund the IRS is a useful piece of the class warfare battle gear for the right--by handicapping tax revenue collection and tax law enforcement, the right facilitates the wealthy elite and the multinational corporations they own and run in ripping off the nation and jeopardizing the lives and fortunes of the middle class and especially the working poor.

There is one bright spot in this budget debate--those Senate Democrats who are proposing an increase of about $26 million in IRS funding, in recognition of the great disadvantage in which the agency, with so many diverse tasks, is put by underfunding compared to the sophisticated taxpayers who are willing to aggressively push the boundaries of tax evasion. See several links, below.

June 07, 2013

In response to concern about taxpayer rights and potentially abusive tax collection activities, Congress passed two "taxpayer bill of rights" laws, in 1988 and again in 1996. Together, these laws protect taxpayers with further notice and information, shift the burden of proof to the government in many cases, and create an office of taxpayer advocate that reports directly to Congress, among many other provisions. The 1988 law (consolidating five different proposed bills into an "omnibus" bill under HR 4333) included provisions that sharply restricted IRS' employees' ability to ferret out tax evasion for fear of potentially violating the law. See summary of HR 2190, "the IRS Administration Reform and Taxpayer Protection Act of 1987", incorporated in the 1988 legislation passed as HR 4333. The 1996 law, HR 2337/ Public Law 104-506, beefed up the Taxpayer Advocate office, modified various penalty and collection provisions, and required an annual report to Congress on IRS employee misconduct. While these laws provided important new protections for taxpayers and noteworthy additions to the law governing collection authority, some were overgenerous to taxpayers and at the least made enforcing the tax laws more difficult for IRS employees.

It was only a short while after the 1996 law was enacted when the Senate Finance Committee held an elaborate series of hearings looking into alleged "abuses" of "innocent" taxpayers by the agency in collecting taxes and investigating potential criminal evasion of taxes: hearings on IRS practice and procedures, Sept. 23-25, 1997; hearings on IRS restructuring, Jan. 28-29, Feb. 5, 11, and 25, 1998; and hearings on IRS oversight, May 28-30 and June 1, 1998. Let it be clear: these hearings targeted the IRS with an apparent objective of changing the agency's focus from enforcement and collection of taxes to "nice-guy" relations with taxpayers. They included "sob stories" about harassment by the IRS from a priest, a divorced mother, a restauranteur and others, and alleged abuses in the collection and investigatory processes within the agency.

Much of the inflammatory testimony in those late 90s hearings was just that--stories, hand-picked to highlight purported problems, with the result that they inflamed the citizenry against the agency. The selected testimony was anything but balanced, in that it ignored myriad examples of just the opposite and included made-up tales of abuse. Danshera Cords, in an article discussing the 1998 Act, describes the restaurant owner's testimony and its lack of truthfulness as follows:

John Colaprete, owner of the Jewish Mother restaurants, "told the Finance Committee that IRS agents and other law enforcement personnel forced children to the floor at gunpoint, leered at scantily clad teenage girls, and generally violated his Fourth Amendment rights against illegal search and seizure, all on the word of his felonious bookkeeper." Ryan J. Donmoyer, Judge May Dismiss Jewish Mother Lawsuit, 83 TAX NOTES 1696, 1696 (1999). Mr. Colaprete testified before the Finance Committee that, while attending his son’s first Holy Communion, "[a]rmed agents, accompanied by drug-sniffing dogs, stormed my restaurants during breakfast, ordered patrons out of the restaurant, and began interrogating my employees." IRS Oversight: Hearings Before the Senate Comm. on Finance, 105th Cong. 75–79 (1998); ROTH & NIXON, supra note 5, at 189.

That sounds atrocious, until you find out that Colaprete later recanted the whole thing, when it was found that he was actually out of the country at the time it was claimed to have happened. Id.

There were two later reviews of the testimony--the Webster Commission and a GAO study (both cited in Cords' article). The Webster Commission found isolated abuses but no pattern of misconduct by the criminal investigation division. Criminal Investigation Div. Review Task Force, IRS, Review of the IRS's Criminal Investigation Division (1999). The GAO study found no evidence supporting the allegations that tax assessments were improperly handled or criminal investigations inappropriately undertaken. GAO, Tax Administration: Investigation of Allegations of Taxpayer Abuse and Employee Misconduct Raised at Senate Finance Committee's IRS Oversight Hearings (reprinted in 2000 Tax Notes Today 80-13 (Apr. 25, 2000)). David Cay Johnston, in his highly regarded book on the tax shelter business, describes those hearings as "going after the IRS". Perfectly Legal (2003). Bryan T. Camp describes Congress as seeing tax administration as an "inquisitorial" process. Bryan T. Camp, Tax Administration as Inquisitorial Process and the Partial Paradigm Shift in the IRS Restructuring and Reform Act of 1998, 56 Fla. L. Rev. 1 (2004) (describing the hearings at 78-86).

The Senate Finance hearings enabled the passage of additional legislation in 1998, the Internal Revenus Service Restructuring and Reform Act of 1998. The law reorganized the IRS, the main agency to enforce the law, into "units serving particular groups of taxpayers with similar needs"--i.e., changing its focus from law enforcement to "serving taxpayers". It "significantly limited" the agency's "historically broad powers". Id. (Cords, at 51). It created a collection due process hearing requirement before the IRS can proceed to collect on taxes due; a bureaucratic (red-tape) approval process for levies, liens and seizures; and severe limitations on examination and audit techniques and impositions of penalties. The agency suffered not only from increased disrespect (from media attention to the inflammatory hearings) that facilitated the right's mission to spread the Reagan mantra that "government is the problem," but also from underfunding, strict limitations on methodologies, and effective intimidation that made it harder to enforce the tax laws and collect unpaid taxes, thus encouraging tax evasion and even tax fraud. Stress, time and resource constraints, and understaffing, got worse, even while Congress dumped more and more administrative responsibilities on the agency.

The always innovative tax practitioners (attorneys and CPAs) noticed. Corporations and their high-wealth CEOs and majority shareholders were already engaging in more tax avoidance with the help of crafty lawyers finding loopholes in the interstices of the tax law and the more restrictive 1988 and 1996 laws that made it harder to enforce or collect. Many now took advantage of the newly flourishing tax shelter schemes from the late 1990s to mid 2000s. These were often promoted by big-money law partners at law firms like Donna Guerin at (now shut down) Jenkens & Gilchrist or Raymond Ruble at Brown & Wood (later Sidley Austin) and financed by investment banks like Deutsche Bank and others eager to profit from derivatives that made deals appear to move money around while essentially leaving it in place, with avid assistance (and sometimes design) by accounting firms like Arthur Anderson, KPMG, and BDO Seidman. The shelters usually had fancy acronyms like "COBRA" and "FLIPs." They frequently involved invented (phantom) losses or phony deductions. Many used purported federal income tax partnership structures to selectively pass gains to tax-exempt or tax-indifferent parties so (phantom) losses could be passed to parties that "needed" a tax loss to offset a large, expected, and real gain.

Hitting the news today is yet another story about a top CEO who engaged in those phantom-loss- generating partnership tax shelters. Zajac & Drucker, Ray Lane Rode Tech-Boom Tax Shelter Wave Broken by IRS, Bloomberg.com (June 7, 2013). Lane, former president of Oracle and current chair of Hewlett-Packard, used a shelter involving partnerships with long and short positions called "POPS"--put together by Sidley & Austin, Deutsche Bank, and BDO Seidman--to shield $250 million from taxation. Id. As Chris Rizek, a tax lawyer at DC's Caplin & Drysdale told Bloomberg, the IRS slacked off on enforcement in those years after the series of bills restricting tax administration because "they were intimidated." Id. "They could be cowed again," Rizek said, given the focus in Congress this month.

We seem to have a "boom or bust" cycle in terms of attitudes towards the IRS as the primary agency for enforcing our tax laws. And that's unfortunate, because a country that cannot force wealthy and corporate taxpayers to pay their share of the tax burden is a country that will fail.

This history should serve as an important warning to Congress, the mainstream media, and citizens as hearings exploiting anti-IRS sentiments spread cries of alleged abuses (seemingly with as little evidentiary support for widespread patterns of abuse as the 1998 hearings) that may again lead to overly restrictive legislation.

While any agency should avoid wasting money on unnecessary travel (and certainly luxury suites is a waste for any government employee), IRS employees should not be restricted from participating in important activities like attending and speaking at the ABA Tax Section's three annual meetings. And while it is important to ensure that there isn't a corrupt abuse of agency power, the hearings so far into the 501(c)(4) selection of various groups (conservative and liberal) for greater scrutiny bear too strong a resemblance to the hyped-up hearings by the Finance Committee in 1997-98, which inappropriately intimidated IRS employees from doing their jobs. Congress should not prevent the IRS from taking forceful actions to fight violations of the tax laws, such as appropriately screening applicants for 501(c)(3) and (c)(4) tax-exempt status.

When he was first nominated, I noted that I found his candidacy somewhat worrisome. While there are a number of considerations that suggest a decently competent person, there are also some suggestions of a person who has lived in the "Wall Street" flow too long and thus falls into line with the typical Wall Street/mainstream economics thinking--thinking which ultimately supports policies that will continue to slide towards oligarchy.

The hearing focused on several interesting aspects of Lew's career and investment choices.

1) Investing in the Caymans. Lew made an investment of 50 to 100 thousand in a Citigroup fund based in theCaymans while he was at Citigroup, and claimed that he didn't know it was an offshore investment. He got out of it when he went into government and lost money on it.

ME: There we have it--like most rich people, he just didn't care enough to consider closely whehter his investment was in a tax haven country and certainly didn't ponder the negatives .

2) Compensation at Citigroup. Lew got a "bonus" of $940,000 in January 2009 when Citigroup was receiving federal bailout funds. He defended it as being paid in the same way other private-sector employees in similar jobs were paid.

ME: But there was a ridiculous racheting up of financial sector compensation during the years when the big banks were feeding at the trough of easy mortgage securitization money and derivative speculation. Shouldn't someone that we hire as the head of Treasury have been more aware of that speculative binge? Or shouldn't that person be at least somewhat ashamed now that such an exorbitant "bonus" (10 times what most Americans receive in annual pay) should have been funded, in essential part, by taxpayer bailouts of his institution?

Now, Orrin Hatch (GOP-Utah) tried to make a big deal out of Lew overseeing the Financial Stability Oversight Council in administering the Volcker Rule limiting proprietary trading, saying that "it could lead to an awkward situation in which, in your role as chair of the FSOC, you would effectively be saying to financial firms: 'Do as I say, not as I did.' " Hatch claimed that this issue "bear[s] directly on your qualifications." I'm not so sure that is such a big worry since I think it is advantageous if Treasury has some understanding of how big banks trade, but it is just one more piece of Lew's overall nature of being well-attuned to Wall Street (and not so well-attuned to Main Street).

3) Corporate taxes. Lew suggested in the hearing that Republicans and Democrats could "work together" so that changes in the international tax scheme could lead to lighter burdens on some foreign income of US multinationals. The Bloomberg report notes that he supported a global minimum tax, but indicated that could be nominally territorial, with limits on offshoring income to tax haven countries.

4) Earned benefit programs. Lew is one of those Democrats who is more right of center than the party's base. He still mentions the need for "entitlement" program changes as well as additional revenue increases as a part of "balanced" deficit reduction.

ME: This is one of the most disturbing aspects of the Lew nomination. He is pushing the GOP agenda of deficit reduction and "entitlement" reform when instead he should be staunchly defending the New Deal against the oligarchs who want to shrink government, diminish the safety net, end any support for innovative environmental and energy progrms, yet continue to reap benefits from the long-term government subsidies for Big Oil.....We should not tamper with Social Security--and there is no deficit reason for doing so.